Sales professionals are constantly exposed to new terms and concepts, all of them promising to help you make quota and close more business. However, the fundamental goal of all marketing activity is to find quality prospects, nurture them through the sales funnel to the point of qualified leads, and then convert them into customers, generating profitable revenue. While every industry has different metrics, you’ll know the average of what it costs to generate that qualified lead. The real secret to sales growth is lowering that cost per new customer, and to invest those savings in more new accounts.
Fixed versus Variable Costs
If you’ve been tasked with building and growing a sales team, you know the problem of the lag time and cost of investment between making a decision to add sales resources and the hiring, training, and other start up issues before the first dime of revenue is produced. For in-house sales team members, those can total up to months of delay and tens of thousands of dollars in upfront costs.
Additionally, increasing in-house staff is, by definition, adding a certain level of fixed costs to your operations. Regardless of your compensation plan, every dollar in additional salary will often add as much as 40 percent in additional overhead and related costs. Additionally, these fixed costs are only part of what becomes your cost-per-close or cost-per-dollar of revenue.
To calculate your true costs of leads, you have to consider
program development costs
Once you have these numbers, you will need to also calculate the actual volume of sales divided by the burdened marketing costs. That provides you with a close approximation of your marketing dollar efficiency, the cost of acquiring a new customer, along with the return on that investment in revenue and profit.
Doing the Numbers
While there are complex models available to assist with these calculations based on specific industries and companies, there are some simple facts to contemplate. From the outset, you can see fixed, upfront costs that require an extended payback period.
These factors are one of the three major reasons many companies choose to outsource inside sales. The math shows clearly that when qualified firms and resources are identified and utilized, they eliminate a large portion of the startup costs for sales people and new market initiatives.
The second motivator for many companies today to outsource inside sales is providing a more flexible, responsive marketing environment. With the new analytics and metrics provided by digital marketing, you can quickly test and measure multiple A/B campaigns, sample new markets, and respond to new market conditions. To maintain this light-on-the-feet approach, you must be able to both add and drop lead generation activities as the market circumstances dictate.
Beyond the numbers themselves, the decision to outsource inside sales leads also brings the potential to enjoy a number of additional advantages. When you select the right firm and specify the right parameters, you get:
Better leads and better lead conversion rates
Lowered average cost per lead, with a greater volume of qualified leads
Immediate productivity from experienced contract resources
Better lead follow-through and responsiveness
Bottom line, the right outside resources, such as a professional contact center, are geared to results, and you can gauge those results objectively faster than with an in-house investment.
Understand the Relationship
This latter issue points to the challenges in working with an outside firm to generate leads. While you are used to controlling your sales force and process, when you turn to professionals outside your firm, you have to focus on results, not processes.
Set clear and well-defined objectives and timeframes, including exactly how a quality lead is defined.
Allow the firm you contract with to use their time-tested processes for generating those leads.
Maintain close communications throughout the process.
When using outside resources, monitor the results of the leads produced, and ensure the benchmarks you set are followed.
If you’re feeling pressure to meet your sales growth objectives, it may be time to invest in outside resources, such as a proven call center. This option often provides flexible and responsive lead generation capabilities with a high ROI.
RDI Corporation was founded in 1978 and is headquartered in Blue Ash, Ohio. We provide precise business solutions through a fully integrated outsourcing model and our clients ranged from mid-sized corporations to distinguished Fortune 500 companies.